The declining American high school graduation rate: evidence, sources, and consequences.

• Author: Heckman, James J.
• Position: Research Summary

The high school graduation rate is a barometer of the health of American society and the skill level of its future workforce. Throughout the first half of the twentieth century, each new cohort of Americans was more likely to graduate from high school than the preceding one. 1-his upward trend in secondary education increased worker productivity and fueled American economic growth. (1)

In the past 25 years, growing wage differentials between high school graduates and dropouts increased the economic incentives for high school graduation. The real wages of high school dropouts have declined since the early 1970s while those of more skilled workers have risen sharply. (2) Heckman, Lochner, and Todd (3) show that in recent decades, the internal rate of return to graduating from high school versus dropping out has increased dramatically and is now above 50 percent. Therefore, it is surprising and disturbing that, at a time when the premium for skills has increased and the return to high school graduation has risen, the high school dropout rate in America is increasing. America is becoming a polarized society. Proportionately more American youth are going to college and graduating than ever before. At the same time, proportionately more are failing to complete high school.

One graduation measure issued by the National Center for Educational Statistics (NCES), the status completion rate (4)--widely regarded by the research community as the official rate--shows that U.S. students responded to the increasing demand for skill by completing high school at increasingly higher rates. By this measure, U.S. schools now graduate nearly 88 percent of students and black graduation rates have converged to those of non-Hispanic whites over the past four decades.

A number of recent studies have questioned the validity of the status completion rate and other graduation rate estimators. They have attempted to develop more accurate estimators of high school graduation rates. (5) Heated debates about the levels and trends in the true high school graduation rate have appeared in the popular press. (6) Depending on the data sources, definitions, and methods used, the U.S. graduation rate has been estimated to be anywhere from 66 to 88 percent in recent years--an astonishingly wide range for such a basic statistic. The range of estimated minority rates is even greater--from 50 to 85 percent.

In an NBER Working Paper published in 2007 (7), we demonstrate why such different conclusions have been reached in previous studies. We use cleaner data, better methods, and a wide variety of data sources to estimate U.S. graduation rates. When comparable measures are used on comparable samples, a consensus can be reached across all data sources. After adjusting for multiple sources of bias and differences in sample...